The Commissioner must consider circumstances justifying reduction or waiver of interest under Rule 40(5) of the Rules before dismissing revision petitions.

Jagannatha Shetty, J.—Since common order is challenged in these two petitions, they shall stand disposed of by this order.

2. The order challenged herein is an order made by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 (the Act). By the said order, the Commissioner dismissed the two revision petitions preferred by the petitioner against the levy of interest under Section 215 of the Act for the assessment years 1967-68 and 1968-69.

3. The facts, which are not now in dispute, may briefly be stated. The petitioner filed his estimate of advance tax payable by him on March 15, 1967, for the year 1967-68 and on March 15, 1968, for the year 1968-69. In the estimates he did not include the income of his minor sons. It is not disputed that the said income is to be assessed in the hands of the petitioner. It was not for the first time that he made such estimates. Even for the year 1962-63 he did the same thing. The authority said that the minors' income should be assessed in his hands. Ultimately, the matter came by way of reference to this court. This court upheld the action taken by the authorities in the case. The appeal preferred by the petitioner against the judgment of this court was also dismissed by the Supreme Court on September 4, 1968, and the decision has been reported in C.R. Nagappa Vs. Commissioner of Income Tax, AIR 1969 SC 888.

4. For the years 1967-68 and 1968-69, since the petitioner paid the advance tax less than 75% of the tax determined on the basis of the regular assessment, the Income Tax Officer levied interest under Section 215 of the Act. Aggrieved by the order, the petitioner preferred two revision petitions under Section 264.

5. Before the Commissioner, the judgment of the Supreme Court in V.D.M.R.M.M.R.M. Muthiah Chettiar Vs. Commissioner of Income Tax, Madras, AIR 1970 SC 10 was cited in support of the petitioner's contention that it was not obligatory for him to include the income of his minor sons in the estimates of advance tax. The Commissioner has stated that the said decision cannot be applied to the case on hand. The second contention urged before the Commissioner was relating to the justification for not including the minors' income in the estimates, since the same question was pending before the Supreme Court in the case, C.R. Nagappa v. Commissioner of Income Tax. It is not disputed that the judgment of the Supreme Court in the said case was pronounced on September 4, 1968, and the estimates of advance tax were filed on March 15, 1967, and March 15, 1968, for the years 1967-68 and 1968-69, respectively. On the said contention, the Commissioner has stated that Rule 40 of the Rules does not provide for waiving the interest on such ground or circumstance.

6. Both the reasons of the Commissioner are assailed by Sri Srinivasan before me.

7. Reference to Clause (5) of Rule 40 of the Rules makes it clear that the Commissioner can reduce or waive the interest payable under Section 215 of the Act in any case where he considers that there are circumstances justifying for such reduction or waiver. The petitioner stated that he was waiting for the decision of the Supreme Court. Before that decision, he thought it was not necessary to include the minors' income in his estimates of advance tax. Can it be said that such a cause or contention falls out side the scope of Rule 40(5) of the Rules. I think not. The Commissioner ought to have considered that cause. The Commissioner has committed an error in stating that the ground urged cannot fall within Rule 40 of the Rules.

8. Since I have decided to remit the case, I think it is unnecessary to consider the validity of the first contention urged, viz., that it was not obligatory for the petitioner to include the minors' income in his estimates of advance tax. Liberty is reserved to the petitioner to urge the same before the Commissioner.

9. In the result, these petitions are allowed, the order impugned is set aside with a direction to